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A publication of the Upper Mississippi Waterway Association.
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January 2016 
Welcome to a new Waterways 
     The Upper Mississippi Waterway Association has been a hard working organization since 1932 when members advocated for creation of a 9-foot channel on the Upper Mississippi River. In the years since, the inland waterway system has become a vital economic link to export and domestic markets for Midwest farmers and others, but the infrastructure has been allowed to age and, in many cases, deteriorate in place. 
      In its 84 years, UMWA's message has been consistent, regardless of the media through which it is delivered: Mississippi River infrastructure needs consistent upgrading and maintenance.  
     Since beginning as a print publication in the early 1980s however, this publication has evolved.  Now we're moving to a new, convenient email format available on your computer or on the go. If you'e having trouble viewing this email, click the 'view this email in your browser link' at the top of the page.  If you'd like to look at past issues of Waterways, they are available on the UMWA website at www.umwa.net
 
DHS:  Condition of system a threat to economy
     Increased terror threats in the U.S. have brought tighter rules for visitors to Locks and Dams on the river.  But, the Department of Homeland Security says the impact of the worsening physical condition of the nation’s lock and dam infrastructure is also a major threat to the system.  In its December report it says, a disruption caused by a component failure would be a crippling blow to the economy.   
     The report mistakenly says that the barge fuel tax has not been increased since 1995 (it increased 9-cents/gallon last year), but other key findings are relevant and timely, including:
- Fifty-four percent of Inland Marine Transportation System (IMTS) structures are more than 50 years old; Mechanical breakdowns resulting in lock closures steadily increased from 2000 to 2010.
- Dam projects are expensive, and funds are limited. As a result, priority projects are often delayed, which leads to more unscheduled lock closures.
     The report also says, “The intensity of heavy precipitation events has increased in the past 50 years, especially in the Northeast and Midwest, and the designs for dams in these regions may not be adequate for current weather patterns.” 
 
From the Executive Director . . .

At Cross Currents
 

     In last month's issue of Waterways, this column reference a report which addressed the relationship between the Jones Act, a strong U.S. Navy and concern over potential sea-strangulation of U.S. commerce.
      In summary, Dr. Patrick Bratton, a political scientist and expert on 'coercive diplomacy' and Captain Carl Schuster, a retired U.S. Navy veteran, both of Hawai'i Pacific University, asserted that the United States has never been so dependent on imports and exports delivered by ship as it is today, and never has the U.S. had fewer ships of its own to carry goods.
      The report stated that China currently has more than 3,900 commercial vessels in global trade, with an estimated 500,000 seafarers; this is in sharp contrast to the U. S. Merchant Marine's supply of less than 100 vessels, and less than 12,000 seafarers qualified for ocean-going employment.  This imbalance between an emerging world influence with a focus on sea power, and the U.S. which is decreasing the inventory of its own flagged vessels, has put our nation and its allies at great risk, the authors maintain.
      The report argues that if the U.S. Navy, which has shrunk to its lowest fleet-strength since 1917, loses the support of commercial American ships and crews sailing Jones Act vessels, it would need to depend on foreign carriers for delivery of necessary and often sensitive U.S. civilian and military cargoes.  In this scenario, queried Bratton and Schuster, could China, Iran, North Korea or Russia create "no-go" zones for ships of other nations and would foreign ship owners and crews take the risk of standing up to these powers?  At the very time that we need more merchant shipping vessels to counter this threat, do we run the risk of having none, they asked?
 
Jones Act Attacks Continue
     Yet critics of the Jones Act charge that it's a protectionist vehicle that drives up costs for consumers.  In reaction to this charge, the report argues that in times of international crisis, the U.S. cannot depend on outsourcing its Merchant Marine to the lowest bidder as foreign vessels might not be willing to go where the U.S. needs and directs them to go.
      Elevating the issue, the December 2015 issue of WORKBOAT MAGAZINE, under the heading of Top Ten News Stories of 2015, lists continuing attacks against the Jones Act as the number four issue, trumped only by articles on the slump in off-shore drilling, the hold on Arctic exploration and the ACL/AEP Deal, in that order. 
While not raising the China issue, WORKBOAT stated that detractors of the Jones Act cite the act as a culprit for Puerto Rico's economic woes, Hawaii's high prices and even as an issue in the October 1 hurricane loss of the container ship El Faro and her crew of 33 as it was headed from Jacksonville, Fla. to Puerto Rico.  (In a sharp reply to the sinking, the Shipbuilders Council of America stated in October there is no causal link between the Jones Act and the El Faro incident.)
      Nonetheless, continued WORKBOAT, that island’s government-sanctioned Working Group for the Fiscal and Economic Recovery of Puerto Rico said the island faces an economic and liquidity crisis "beyond what any jurisdiction in the United States has faced in generations" and recommended a number of fixes.  Among them is to exempt Puerto Rico from the Jones Act to reduce costs and “improve the ease of doing business.”
     An added possible fix for the commonwealth would be state-like treatment under Chapter 9 of the U.S. Bankruptcy Code which would require congressional approval.  But, said Sen. Chuck Grassley, R-Iowa, Chapter 9 alone wouldn't solve Puerto Rico's problems, but that "we should consider exempting it from the Jones Act, which limits competition and raises the cost of living for island residents."
In defense, Jones Act supporters say the law is not to blame for high prices and there's no guarantee shipping rates would fall if it were changed.
      Another attempt at changing the law was stymied by an appeals court, which rejected Hawaii residents' claim that it causes them inequitable harm and inflated prices.  They wanted the act invalidated for interstate commerce involving Hawaii.  However, a three-judge panel of the Ninth Circuit Court of Appeals dismissed claims that the Jones Act amounts to an unlawful restraint of trade in violation of the Commerce Clause of the U.S. Constitution.  Further the Court said the plaintiffs didn't show that shipping companies would lower their prices if the law were changed.  The appeals court later denied a request for rehearing, said the magazine.
 
Support Remains Strong
     "The Jones Act is safe.  It's very widely supported", said Charlie Papavizas, a partner at Winston & Strawn and a Jones Act expert. "There's no organized opposition.  There's sniping".  The most likely place for a serious threat is an international trade agreement.  "It's all done behind closed doors.  Then a deal is cut.  By necessity, they have to make tradeoffs", he said.  "No industry is going to volunteer to let a foreigner into their market.  And in that environment, the Jones Act is trade bait".
      The WORKBOAT article also quoted Tom Allegretti, chairman of the American Maritime Partnership and CEO of the American Waterways Operators (AWO) that the law isn't going away anytime soon.  "Simply put, I do not believe that Congress is going to pass a law that outsources thousands of U.S. jobs and undermines national, economic and homeland security.  That's what repealing the Jones Act would do," he said at a recent Jones Act conference.  He also suggested that an anti-Jones Act amendment would doom any legislative aid package for Puerto Rico.
 
Why Does This Matter?
     Report authors Bratton and Schuster state that experts on sea power agree that a nation’s commercial shipping capability is closely tied to its naval power, and indispensable for economic and military security.  According to Geoffrey Till, author of “Seapower: A Guide for the 21st Century”:  A healthy merchant marine and secure sea lines of communication are essential for national security in peace and war.”
 
Disclaimer:  Thoughts and opinions expressed in this column are those of its author and not necessarily those of the Upper Mississippi Waterway Association or its members.
At Cross Currents

 
Other items of interest

- The University of Arkansas has begun a multi-modal study of U.S. transportation systems, including inland waterways and researchers say they want to create ‘tools’ to improve the efficiency of the systems. “Transportation touches every aspect of our lives, and the numbers make it clear that our nation's rail, road and waterway infrastructure is vital to our way of life,” the U of A says. 

- Container vessels continue to grow in size and efficiency as interest in containers also increases.  The world’s largest container vessel created a big stir when it called at the Port of Los Angeles last month and in the Midwest, the Midwest Inland Port near St. Louis was named one of the top 10 intermodal ‘sites to watch’ by the business publication AreaDevelopment.com

- Media stories about the impact of the recent flooding along the Mississippi River frequently included references to the economic impact of the disruption in barge traffic. Typical was Yahoo news which said, “The flooding was already increasing costs. Exporters along the U.S. Gulf Coast boosted their bids for soybeans by nearly 10 cents per bushel to the highest levels in 1-1/2 months on Monday because of the lack of barge traffic that left the shippers short of supplies.”  And the international Hellenic Shipping News noted that, “Cash premiums for soybeans GRYM in the U.S. barge market, jumped to as high as 70 cents per bushel on Wednesday, their loftiest since mid-November as the rapidly rising waters forced the Coast Guard to shut a five-mile section of the Mississippi River, including the harbor at St. Louis, traders told Reuters.”
 
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